On January 1, 2021, the Anti-Money Laundering Act (“AMLA”) was enacted by Congress as part of the National Defense Authorization Act (NDAA). The AML Act has made emerging technologies, such as AI, machine learning, and quantum information sciences, a national priority. Containing China’s technological clout was a pillar of President Trump’s technology policy and remains a top concern for his successor.
A White House office has been established to coordinate a national effort to advance emerging technologies. A task force is set up to develop a research cloud. Researchers across the country are now increasingly gaining access to advanced computing and government data.
The DOJ, Treasury, and affiliated agencies are also investing heavily in new technology to combat money laundering and relevant agencies are now required to file annual AML technology reports to Congress.
It goes without saying that financial institutions should take the technological implications of AMLA seriously. They need to understand what the latest AML provisions are. They must identify which technologies will help them fully abide by the law.
To that end, here is a quick summary of the AML Act’s key provisions, followed by recommendations on how institutions can minimize risks and ensure compliance.
Key Provisions of the AML Act
- FinCEN to review financial institution reporting requirements related to suspicious activity reports (SARs) to reduce any unnecessarily burdensome regulatory requirements.
- The U.S. government is promoting technological innovation for AML and CTF purposes.
- Digital currency is now included in AML/CTF enforcement.
- Financial institutions are no longer responsible for the collection and maintenance of beneficial ownership information for all U.S. companies. Certain U.S. companies are now required to report their beneficial owners to the Department of the Treasury’s FinCEN.
- Virtual asset service providers (VASPs) now fall under the law. They must report any suspicious activity to the relevant authorities.
- Examiners must assess how financial institutions are incorporating the national AML/CTF priorities into their risk-based AML/CTF programs.
- Financial institution examiners must attend annual AML/CTF training.
- Innovation and information-sharing are encouraged by the Bank Secrecy Act (BSA). Authorities must now adapt to changing conditions and to innovations in AML/CTF.
- FinCEN and federal functional regulators are required to appoint “innovation officers.” Their job is to make FIs and other stakeholders aware of new methods and technologies that may assist in compliance. They must also ensure that VASPs are brought under the confines of the BSA.
- Civil penalties for a first violation can be twice the maximum, or three times the violator’s profit resulting from the violation. Individuals convicted of BSA violations must now repay profits and bonuses.
Comply with Confidence and Efficiency
The AML Act is here to stay, and every aspect of it will be enforced.
To steer clear of penalties, financial institutions need to clear any COVID-19 backlogs as soon as possible. They must make up for any delays caused by the availability, productivity, and efficiency of financial crime teams working remotely. They need to overcome any delays caused by the sudden increase of alerts from transaction monitoring systems – especially all the false positives flagged by TMS that were confused by unusual, but legitimate, COVID-related economic patterns.
FINCEN publicly granted leniency to institutions experiencing delays in their ability to file required BSA reports in 2020. However, the expectation is that institutions should now be caught up and working towards full compliance with the AML Act.
Financial institutions must now focus on streamlining their operations through greater innovation. Those that fall behind face heavy penalties. Just as the government is investing in new technologies including AI to combat money laundering, so financial institutions need to accelerate their plans for modernizing AML operations. With this new directive in place, regulators will be expecting financial institutions to improve their investigative efficiencies by embracing RPA, AI, and machine learning capabilities. And, they need to do it fast.
Meet Obligations While Exceeding Expectations
To help financial institutions keep pace with the regulatory changes brought about by the AML Act, and to keep the world’s financial transactions and trades flowing, the QuantaVerse Financial Crime Platform addresses regulators expectations while also delivering new benefits to AML teams.
Each phase of the investigative process is automated by machine learning tools with initial data gathering and organizing processes handled by RPA bots. Financial Crime Investigation Reports (FCIRs) deliver fully explainable recommendations and supporting data to investigators in a consistent format for efficient adjudication. Finally, natural language processing (NLP) summarizes findings for consistent and speedy reporting.
Proven to reduce 70% of the time spent on investigations, the QuantaVerse Financial Crime Platform allows financial institutions to do more with the teams they have, even as demands grow. No additional training is required for AML teams to produce comprehensive, intuitive reports. As a result, institutions can expect cost savings associated with recruiting, training, and outsourcing.
The QuantaVerse Financial Crime Platform, which can quickly be configured to suit any institution’s preferences and processes, delivers results in weeks, not months (or years).
To learn more about automating your financial crime investigation program, please visit: QuantaVerse.net/our-solutions.